If you or your spouse are currently part of the U.S. Armed Forces, or are a retired member of the military, you likely have an ingrained understanding of the importance of planning for the unexpected. Along with the gratitude of the American people, members of the military are entitled to a variety of benefits and incentives for serving their country. Many of those benefits can be transferred or passed down to loved ones if something happens to you; however, to ensure that your loved ones receive everything they are entitled to, you need to incorporate your military status into your estate plan. To help you get started, the Los Angeles attorneys at Schomer Estate & Wealth Advisors discuss how estate planning is different for members of the U.S. military.
Estate Planning Basics
Working with an experienced estate planning attorney is the best way to ensure that your comprehensive estate plan meets your individual needs and achieves your unique goals. In general, however, your estate plan should provide for loved ones and plan for the distribution of your estate assets upon your death and protect you, your assets, and your loved ones in the event of your incapacity during your lifetime. At a bare minimum, that typically means you will create a Last Will and Testament and/or a trust agreement to distribute your estate assets after your death and incorporate incapacity planning tools and strategies into your estate plan to ensure that your wishes are honored if you are unable to express them down the road because you are incapacitated.
Military Benefits and Estate Planning
As a current or retired member of the military, you are undoubtedly aware that you are entitled to a variety of benefits that can help provide for you and your family. If something happens to you, your family members may remain eligible for many of these benefits. Unfortunately, you cannot rely on the government to notify your loved ones of their eligibility. Instead, you need to make sure that your military benefits are incorporated into your estate plan. Some examples of military benefits that might be included in your comprehensive estate plan include:
- Serviceman’s Group Life Insurance (SGLI). SGLI is an employee benefit term life insurance offered to active duty servicemembers that provides monetary benefits to a servicemember’s designated beneficiary if the servicemember dies while on active duty. Be sure that your beneficiary designation is up to date and name a contingent beneficiary in case your primary beneficiary predeceases you. If you want a minor child or a beneficiary with special needs to receive the benefits, you should establish the appropriate type of trust and choose your Trustee carefully. Also be sure to list your SGLI benefits in your Will or trust.
- Active Duty Survivor Benefit Plan (ADSBP). Both military pay and retired pay end with the death of a servicemember but ADSBP provides an annuity for beneficiaries of servicemembers. Your spouse and/or dependent children may receive benefits from the annuity after your death. ADSBP benefits are paid at 55 percent of what your retirement pay would have been had you retired on the date of death with a 100 percent disability, equal to 75 percent of the highest 36 months of base pay. Like your SGLI benefits, be sure your beneficiary designations are current.
- Survivor Benefit Plan (SBP) for Retirees. If you are a retired servicemember, you have the option to take a reduction in retirement pay and designate a beneficiary to receive a portion of that pay after your death. Your family structure and status will impact your beneficiary options, for example:
- If you are survived by a spouse and children, benefits will be paid to your spouse. If your spouse dies or remarries before age 55 the benefits pass to eligible children.
- If you are survived by children only, your SBP benefits are divided equally among all eligible children. The benefits end when a child ages out of the program.
- If you have a special needs child, the child can receive SBP for life as long as he or she remains unmarried. Because these benefits could impact eligibility for government assistance programs such as Medicaid or SSI, it is critical that you establish a special needs trust within your overall estate plan.
- Dependency and Indemnity Compensation (DIC). DIC benefits may be available to your survivors (spouse, children, or parents) if you die while on active duty, if your death resulted from a service-connected injury or disease, or you are a fully disabled veteran.
- Death Gratuity. This is a one-time tax-free payment of $100,000 (as of 2023) payable to your next of kin if you die while on active duty.
Don’t Forget about Incapacity – Veteran Aid and Attendance Benefits
Whether directly related to your service in the military or simply because of the natural aging process, you may find yourself incapacitated and in need of daily assistance. If so, you might qualify for additional financial help each month through the Veterans Aid and Attendance (VA&A) or Housebound program. To qualify, you must already receive a VA pension and meet at least one of these requirements:
- You need another person to help you perform daily activities, like bathing, feeding, and dressing, or
- You have to stay in bed—or spend a large portion of the day in bed—because of illness, or
- You are a patient in a nursing home due to the loss of mental or physical abilities related to a disability, or
- Your eyesight is limited (even with glasses or contact lenses you have only 5/200 or less in both eyes; or concentric contraction of the visual field to 5 degrees or less)
If you are eligible, you will receive an additional dollar amount added to your VA pension each month. To find out if you qualify, navigate to the U.S. Department of Veterans Affairs website.
Do You Need Help Creating Your Estate Plan?
For more information, please join us for an upcoming FREE seminar. If you are a current or former member of the military interested in learning more about estate planning, contact the experienced Los Angeles estate planning attorneys at Schomer Estate & Wealth Advisors by calling (310) 337-7696 to schedule an appointment.
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